While the word “mall” originally referred to any pedestrian promenade, the modern American mall began with the rise of the suburban dream. The first enclosed mall in the United States opened in 1956 in Minneapolis. Its designer, Victor Gruen, envisioned an indoor version of the market centers in Austria where he grew up, complete with stores, post offices, medical centers and even museums.
Over the 1950s and 1960s, more enclosed malls started popping up across the country, anchored by department stores and offering shopping, dining and entertainment under one roof. They became a social destination where teenagers met on Saturday nights, families shopped together and couples went for dates. In the 1980s and 1990s, mall real estate investments soared. Malls were considered safe bets, both socially and economically.
But the mall never quite became what Gruen envisioned. For decades, the configuration of malls remained the same: a large anchor retail store with smaller retail stores (typically clothing), a food court and often a movie theater.
That may be changing today.
Are Malls in Free-Fall?
With the rise of the internet and online shopping, consumer spending shifted. The 2008 financial crisis weakened malls further, especially major department‐store anchors. And consumers began to prefer open‐air, pedestrian‐friendly formats. When the pandemic hit, many wondered if malls would survive as remote shopping spiked.
The number of malls declined 16.7% per year between 2017 and 2022. Year after year, mall vacancies were at their highest in history, and many began to show symptoms of decline: rising vacancies, declining foot traffic and even full closures. The American mall seemed to be a thing of the past.
Then something interesting happened: consumers still wanted to go to these hubs of socialization, retail and entertainment, but they just wanted more from them.
It’s All About the Experience
Instead of closing, malls are embracing the experiential retail of the future. Traditional retail anchors like Sears (soon down to just five locations), JCPenney (closing eight locations this year) and Macy’s (closing 150 stores by the end of next year) continue to downsize or disappear completely. Developers and owners have recognized that the classic model may not be able to sustain foot traffic in some cases. As a result, owners are seeking more creative “anchor stores” and repurposing vacant spaces into fitness centers, grocery stores, healthcare clinics, co-working hubs and residential units.
The Arcade Providence in Rhode Island, America’s oldest shopping mall, set a precedent when it converted its top two floors into 48 micro-apartments in 2016. Now, this trend is accelerating, especially with the demand for multifamily housing. In Phoenix, Arizona, the Paradise Valley Mall opened 400 luxury units in 2024, while Lafayette Square Mall in Indianapolis will complete 1,200 apartments this year, including options in a former Sears. Meanwhile, large-scale attractions like pickleball courts, churches, ice skating rinks and escape rooms are increasingly drawing visitors.
These shifts reflect both economic necessity and a broader cultural change. Consumers want gathering spaces that offer community, convenience and experience, not just shopping.
Consumers Like Their Communities
Malls are becoming more involved in their communities, including helping local businesses lease space and hosting local events and pop-up shops.
- In June, Fair Oaks Mall in Virginia hosted the Taste of FFX event featuring a mix of local dining and regional chains.
- In July, the family-owned department store Boscov’s hosted a community charity luncheon at the Greece Ridge Mall in Greece, NY.
- In September, Holyoke Mall in Massachusetts hosted a community job fair with in-person interviews.
- In October, Bassett Healthcare’s Cancer Service Program hosted a cancer resource event at Sangertown Square Mall in New Hartford, NY.
Investors Still Believe in Malls
A flurry of investment in mall redevelopment shows that investors still believe in the draw of malls. For one, the developer of Tysons Corner Center in the Virginia suburbs of the Washington, D.C. area, recently announced plans for a $100 million investment in renovations. And the Mall of America in Minnesota is pursuing a major entertainment-anchor project: a $432 million indoor water park called Mystery Cove to open in 2029.
In Dallas, NorthPark Center, a high‐end, luxury‐oriented mall, secured a $1.2 billion refinancing, signaling investor confidence in the property. It is doubling down on its status as a premium retail destination with high occupancy and luxury brands.
In addition, Westfield Century City in Los Angeles recently underwent a $1 billion redevelopment, and in 2025, it closed a major refinancing deal, showing continued commitment to growth, which emphasized outdoor plazas, terraces, dining, fitness and health services.
In-Person Shopping is Still Important for People
NetChoice data show that physical stores still account for about 80% of all retail sales. The in-person retail experience in malls remains valuable because it offers something digital shopping can’t replicate: connection, immediacy and community. Even brands that once defined the online era, like Warby Parker and Glossier, are investing in physical storefronts to deepen customer engagement.
Shoppers still crave the ability to see, touch and try products before they buy. And research shows that consumers spend significantly more per visit in-store than online.
Beyond the tactile experience, physical locations help brands foster trust, storytelling and spontaneous discovery, transforming routine shopping into an immersive experience that strengthens loyalty and can drive long-term sales.
The Next Generation of Malls
As malls shift to favor experiential retail and this attitude continues to proliferate among consumers, retailers must continue to expand these offerings past the traditional shopping model. In malls across the country, for instance, immersive art collective Meow Wolf is transforming shopping into interactive, sensory events.
The appeal of tomorrow’s mall will hinge less on purchases and more on participation, offering spaces that are immersive, social and experience-focused. To remain relevant, major destination malls will need to provide entertainment and cultural hubs rather than purely retail centers.
Malls are being reimagined as modern “town centers” that blend retail, dining, fitness, medical, civic and residential spaces as people continue to seek out connection and community. This shift to vibrant, mixed-use communities where people live, connect and gather will keep malls relevant for decades to come, just like Victor Gruen imagined for the first American malls.
Image via Unsplash.